It is also expected to provide a boost for the Athens government's stalled sell-off programme, while Piraeus has received an accolade from China's Transport minister.
In London recently to address the 28th IMO assembly, Shipping and Aegean minister, Miltiadis Varvitsiotis met with China's deputy Transport minister, Weng Mengyong, who is responsible for maritime transportation. The strategic cooperation developed in recent years, through the presence of Cosco Pacific as operator of container terminals II and III in Piraeus, topped discussions.
Referring to the new contract agreement reached between Cosco and the PPA, Varvitsiotis said: "Cosco's presence has seen the largest port in Greece move into in a new development dimension. We were able to double that investment, by reaching an agreement with multiple benefits, both for Greek shipping, and for society itself, creating revenue and jobs in a difficult period for the country," adding, "our intention now is to strengthen this strategic partnership with China.”
Weng declared: “Every time I visit Europe, I use the investment [in Piraeus] as the prime example of successful Chinese presence on the continent.”
The agreement took place in the context of the extension of the contract between the two parties, under which Cosco Pacific signed a 35-year concession agreement in 2009 to run the two container terminals in Greek shipping’s homeport.
However, the latest agreement hammered out after negotiations that lasted for several months, still has to be sanctioned by European competition authorities.
In return for an increase in the annual guaranteed capacity to 4.75m containers by Cosco, the Chinese company will be relieved of having to pay a minimum guaranteed amount until the country’s gross domestic product returns to 2008 levels plus 2%. The Chinese company will also construct a fuel dock on the PPA’s behalf, which Piraeus Port will repay in 22 years.
The PPA’s share in the turnover of the Cosco subsidiary -- Piraeus Container Terminal (PCT) -- operating in Piraeus will remain at 21% until 2016 and rise to 24.5% from 2017 onward.
The deal is expected to secure PPA’s future revenues and open the way for the stalled privatisation of Piraeus port and kick-start privatisation of Greece’s second port Thessaloniki, and developed as a major gateway to eastern Europe.
Under pressure from its international creditors – the European Commission, European Central Bank and the IMF (the so-called ‘troika’), the Athens government is keen to expedite the privatisation of the Greece’s two largest ports. The process had been stalled since Greece’s Prime minister Antonis Samaras had stepped in, late August, to end the stalemate in reaching a new agreement between Cosco and the PPA which threatened to sour relations between Athens and the Chinese.
Clearing the EU Competition commission is now likely to be the biggest hurdle ahead. While the EC generally wants the PPA to be privatised there is opposition within Europe to Piraeus securing a majority share of Chinese container trade into Europe. Italy and Malta in particular are said to be concerned about the growth of the Greek port.
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